LONDON (Reuters) - European leaders are still chewing over the meaning of this weekend's G20 summit in Hamburg, long as it was on symbolism and personality dynamics and short on real policy shifts.
Angela Merkel has become embroiled in a row back home with critics complaining that her choice of venue meant violent protests were all but inevitable; this has all but snuffed out any kudos she may have received for stage-managing what was otherwise a relatively successful meeting.
Ukraine is reassured that, despite the bonhomie between Donald Trump and Vladimir Putin, there was no suggestion that Washington is looking to cut a deal with Moscow over the future of Crimea and eastern Ukraine or lift sanctions on Russia. That sets the stage for a visit to Kiev today by NATO Secretary General Jens Stoltenberg that will shine a spotlight on Ukraine's albeit distant hopes of joining the alliance.
Britain's Theresa May will meanwhile be able to make much out of Trump's promise to strike an early trade deal with the UK after it leaves the EU - just as new data emerge today showing major companies have curtailed their investment plans and consumers have spent less on their credit cards.
The German economy in contrast continues to show signs of rude health, this time with a greater-than-expected 1.4 percent rise in exports for May, outpacing growth in imports to widen the trade surplus further.
In Paris, it is down to business for Emmanuel Macron's government as it launches the debate in parliament over a sensitive labour law reform bill.
MARKETS AT 0655 GMT
World stock markets are continuing to feed off a pretty benign environment of reasonably healthy global growth with insufficient capacity constraints yet to feed either significant wage, retail or even energy price inflation.
Friday’s June U.S. employment report underlined that yet again with above forecast payroll gains with little pickup in average earnings – all of which led to a brisk rally for Wall St stocks that has buoyed all boats in Asia and Europe as the new week gets underway and the Q2 earnings season comes into view, starting in earnest with the big U.S. financials on Friday.
The economic data drumbeat on Monday continued to paint an upbeat picture, with German exports and imports up more than expected in May and yet another data point defying fears of 2017 hit to world trade, led by a protectionist U.S. administration. And the weekend G20 summit in Hamburg had little fresh to offer markets on that score one way or the other.
Chinese consumer price inflation for June came in at an expected and subdued 1.5 percent.
The Bank of Japan offered its most optimistic view of the country’s regional economies in 12 years, meantime, even though there was a big miss registered from May nationwide machinery orders.
Overall, the rebound in economic activity relative to consensus expectations continues, with Citi’s economic surprise index for the G10 leading economies at its highest in month even if still in negative territory overall.
Fears of synchronised monetary tightening from the world’s big central banks, which have jarred global bond markets over the past couple of weeks, remain given an assumption policymakers fearful of financial stability issues will not wait for inflation to kick in before removing extraordinary stimulus measures. This week’s big set piece in that regard is Federal Reserve chair Janet Yellen’s semi-annual testimony to Congress on Wednesday.
Asia bourses were buoyant early Monday, with dollar/yen’s gains helping the Nikkei225 outperform with a rise of 0.76 percent.
The Bank of Japan’s renewed commitment to capping the rise in 10-year government bond yields is keeping the yen under pressure as bond yields elsewhere in the developed world rise.
European stocks are expected to open about 0.6 percent higher. Euro/dollar was hovering just shy of $1.14. Ten-year Treasury yields are off slightly about 2.3840 percent, with the 2-to-10-year yield curve steepening to just under 100bp – its highest since mid-May. German 10-year bund yields were down a little from Friday’s 18-month peaks. Brent crude remains subdued below $47, tough up from Friday’s lows.
Editing by Andrew Heavens